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tv   Nightly Business Report  PBS  April 23, 2013 6:30pm-7:00pm PDT

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this is "nightly business report report" with tyler matheson and susie geling. >> brought to you by the street.com. for an ever-changing financial world. our dividend stock adviser guides and helps generate income during a period of low greinter rates. action alerts plus is a charitable trust portfolio that provides trade by trade strategies. online, mobile, social media. we are the street.com. not upon setting the applecart. apple earnings better than expected, for the most part and the market responds after hours. >> and midwest flooding, rain and snow soaked the country's
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midsection and the worst may be yet to come for businesses and farmers. >> and hollywood's new courtship. why the movie industry is seducing aging baby boomers. all of that and more on "nightly business report" for tuesday april 23rd. good evening, everyone. tyler, what a day. a lot of drama, a lot of suspensisu suspen suspense. there was that surprising sell-off on wall street and the apple earnings after the market closed and. >> and yet when all was said and done the markets gaining for the third straight day, despite a mid-session sell-off on a fake tweet that spooked already jittery traders, but the big story right now is apple's second-quarter earnings and the news was mostly good. apple beat on the top and bottom lines on strong sales of the iphone and the ipad tablet. it's increasing a stock buyback program by a staggering $50 billion, spending some of its cash hoard and it's being. >>ing up its dividend 15%, but
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apple did lower its guidance for the current quarter and that disappointed wall street just a touch. seema modi on where the stock is after hours. >> apple beating street expectations, and the second-quarter revenue coming in at $43.6 billion versus the street expectations of $43.1 billion. its quarterly earnings also topped street consensus by 9 cents. analysts were hoping for clarity in the allocation strategy and the street got that. apple sharing the repurchase authorization from $30 billion to $60 billion and apple increasing its quarterly dividend by 50%, and they're $3.05. ceo tim cook in the press release says we are very fortunate to be in the position to more than double the size of the capital return program we announced last year. in terms of its iphone and ipad sales, the company sold $37.4 million iphones and 19.9 million
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ipads in this quarter, both that came in higher than street expectations. tim cook said our teams are hard at work on some amazing new hardware, software and services, and we are very excited about the products in our pipeline. good news there, tyler and susie? >> seema, thank you so much. seema modi reporting from the nasdaq. let's turn now to john buckingham. he's been buying apple for his clients and he's chief investment officer at asset management. so, john, is this what you expected in terms of earnings and the dividend and the stock buyback from apple tonight? >> well, it was certainly a news-filled afternoon from apple. the stock buyback was frankly, more than we might have envisioned so we're very appreciative of that. apple has a gigantic cash hoard. over $150 a share in cash and we really are happy that they're putting that to work especially when you can buy the stock here at these very inexpensive
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valuations. >> we are trading at less than ten times earnings for one of america's greatest corporations and yes, i know that earnings were a little disappointing in terms of the guidance here for the next quarter, but this is a fantastic company with tremendous products and a huge, installed base of rabid customers. yes, they're going through a little bit of a product lull here now as we wait for the next big thing, and of course, that's what's on everybody's mind as we go forward. >> you've been taking some profits prior to recently. you've been buying the stock for some kientclients. if i didn't own the stocks based on your numbers and i'm not asking you to be a portfolio manager, i'm just saying, would you buy it at these prices? >> tyler, i am a portfolio manager and i would be a buyer of the stock at these prices and maybe it will pull back a little bit as people might get concerned about that forward guidance, butta be salutely.
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as part of a diversified portfolio and i'm always about diversification. we've owned apple since 2003 and you're right, we did take money off the table a year ago in the $585 range, but when it went back down it looked like a stock in our mind that something we want to add to portfolios. and the multiples are important to us. single-digit p-e. fantastic balance sheet, great products and this is amazing. the company earned $10 billion in the quarter. >> you know, john, a lot of future growth and revenues and earnings will depend on what the next new thing is as you mentioned a while ago and everyone is waiting for apple's next big hit. some people are talking about an apple tv. what would be the game changer and the next must-have consumer gadget that will make a big difference for apple. what do you think? >> i think it would certainly be a product people would want to buy. the problem is can apple make it at a reasonable level of margins. you are not selling a $300 phone
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or $400 phone subsidized by a phone company. you're selling a gigantic television set which costs a lot of money as far as components go and so that would be the real challenge. can you maintain those margins? we're complaining the margins dropping 36%, 37% in the next quarter. i just don't think they can maintain that with the television. so we'll give them the benefit of the doubt and this is a company that's been innovative year after year after year, and i don't know what the next big thing will be and i feel protect with the strength of the balance sheet and the inexpensive valuation to be a buyer of the stock at these levels. >> there had been some rumblings about tim cook, the ceo of that company. you said any rumblings that he might be in jeopardy -- i might quote you, it's a bunch of hooey. that say technical term. does this lay it to rest if it needed to be laid to rest? >> i think so. the folks that were agitating
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for change at apple were concerned about how they would spend the cash hoard. so the david einhorns of the world i would imagine are happy today given the gigantic increase in the buyback and tim cook, he's been there a long time. it's not he just came a year ago and presided over a stock slump from 6 thoun 400. he's been part of the history of apple and has been a very innovative guy, as well and keeping the trains running on time say big deal. >> everybody loves to talk about and we'll talk about it more tomorrow. john buckingham, chief investment officer at al frank, asset management. >> as we mentioned earlier, wall street was rattled shortly after 1:00 eastern time after what turned out to be a phony tweet under the associated press' twitter handle. by the time it was determined that hackers sent out that bogus bulletin, the dow in a 14s of electronic trading tumbled
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$14303 points and just as quickly the index snapped back within a few points of where it was. you can see almost the second by second trading action in this dow chart. the s&p 500 and the nasdaq and treasury futures all had similar reactions. now comes the investigation. how was a.p.'s twitter feed compromised? who did it? was it someone to hook the market after the boston bombings. a pro-assad syrian group claimed responsibility, but that claim has not been verified and while officials try to figure out what happened traders breathed a sigh of relief as the markets rebounded to notch a third straight day of gains. helped by a boost in new home sales and a strong round of earnings before the bell, stocks chocked up another winning session. in the end the dow shot up 152 points and the nasdaq up 35. the s&p added 16. more headaches today for people traveling by air. at airports from coast to coast
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more flights were delayed because of furloughed air traffic controllers due to the budget sequester. members of congress today urged the white house to postpone those furloughs to speed up air travel and find other ways to save money. those long lines means more americans are flying and that means good news for some of the nation's biggest airlines. with two major carriers reporting their latest quarterly results today, phil lebeau tells us what's drawing profits at the airlines and the challenges they're facing in the months ahead. >> the combination of tax liens and higher revenue drove two of the country's largest airlines to post a rare profit in the first quarter. >> delta air lines, excluding charges it earned 10 cents a share on revenue of $8.5 billion. by the way, this is the first profitable first quarter in over a decade for delta. >> meanwhile, u.s. airways beat the street earning 31 cents a share on revenues of under 3.4
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billion. the combination of tighter capacity and higher load factors meant they were lower in the first quarter and fuel prices also help the bottom line. executive it is for the airline expressed concerns due to the faa furloughs impacting their business in the second and third quarters. with more delays expected some on wall street are worried the sequester could warn potential airline customers not to fly. >> people get to vote their vacation dollars however they want and they see that it's a hassle to fly more than it's normally a hassle to fly and they may vote and, you know, differently and with lower gasoline price s they might get people driving to their vacation rather than flying. >> so far bookings have not been hurt by sequester delays, but there is a genuine concern that
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if the longer they last and if they become worst, people who were planning to take a flight might decide not to take that trip. phil lebeau, "nightly business report," chicago. we are just two weeks into the first quarter earnings season and you've probably noticed that many companies have been reporting earnings that are better than investors expected and there are also weak forecasts for the rest of the year like the one we got from apple tonight. with 20% of s&p 500 companies already out with their quarterly numbers. how is corporate america doing? here's bob pisani with the earnings scorecard. >> it was a good day for earnings, and most importantly, big, multinational industrial companies like united technologies, ingersoll-rand and illinois toolworks affirm their 2013 earnings guidance and if there were significant signs of an ongoing global spot of it. it may be a little bit below
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expectations, but we expectest mo of the way through. here's the good news. almost 70% of the company's reporting have been reporting expectations. the only 42% are beating on the top line, on revenues and that's way below the 62%. this has been a problem for several quarters and it means the companies are able to do well on earnings because they become cost-cutting monsters not because they're increasing their revenues and of course, it's good for companies to become more cost efficient, but the lack of revenues and adding to the employment problem. companies are reluctant to hire more people when they're not able to sell anymore. for "nightly business report," i'm bob pisani at the new york stock exchange. >> here now to talk more about those first quarter earnings results and to look forward is christine schwartz, senior manager at s&p capital i.q.
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thank you for joining us. >> thanks for having me. >> the disappointment if there is a disappointment is that revenues have not been growing the way profits have. it's easier to finagle good profits than it is the top line, isn't it christine? >> sure. there is a disparity between what we've seen with earnings results and revenue results. with all of the companies that reported after the bell, we have 67% of s&p 500 companies beating on the bottom line, however, only 41% beating revenues and just like you said it's very easy through accounting measures to throw in a special item and create the illusion of having a higher profit than you actually do, however, you can't really manipulate that top line number. that's what's been particularly concerning this season. it's kind of dayseja vu to the second and third quarter of last year when we saw a similar trend emerging. >> i think what's interesting is we're seeing many more companies
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forecasting weaker growth going forward for the rest of this year versus a positive outlook. what does that mean for earnings growth for the rest of 2013. at the end of the year, what is earnings growth going to look like? >> for the second quarter, 28 companies have provide guidance. of those have given negative guidance, only four positive and three in line. that gives us a negative deposit ratio of 5.3 and that's the highest negative deposit of ratio we've seen in 15 years of data. much higher than we saw in the last few quarters and that's discon severe weather, of course, and not terribly surprising because companies did warn, the first whafl of the year would be quite weak in comparison to the second half of the year. we are seeing brighter outlooks for the second half of the year. q2 will be weak. who is hot and who is not and
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can the hot stay hot and will the cool stay cool? >> telecom is our leading sector right now and with almost all of those companies reporting they're up about 10%. of course, we saw at&t beat okt bottom line today adding to the overall growth rate. not much of a story there, but there are eight companies within a sector and they're doing well because of heavy weights like at&t, verizon. sprint reporting tomorrow and they're expected to do better this quarter than the year ago quarter. as far as other leaders, we have consumer discretionary and financials and they're both expecting % growth. within consumer discretionary, it's the homebuilders and retailers that are driving growth there and financials which began the season expecting negative growth, negative 1% growth, they're actually up 7% after great reports from big banks such as morgan stanley, goldman sachs, stae citigroup and that's where the financials have certainly gained as companies have come out and reported positively within that sector. >> looking behind those sector
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numbers and who's winning and who's not, what is that telling you about economic and business conditions? what are the themes? >> some of the negative themes we're seeing and despite what bob said, yes, we did see group reports out of industrial companies today. overall the industrials are expected to be down year over year as are the materials and when you have two sectors that are proxies are global growth, it is disconcerting and just continues what we already know and there is still weakness in global growth. a lot of these companies are still citing europe and china as areas that they're seeing weakness in the first quarter and continuing into the second quarter. i would say those two sectors alone do paint a rather negative picture and then, it is nice to see consumer diskregary on the other end and that consumers are still out there shopping. >> christine schwartz, senior
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manager at s&p capital i.q. coming up on the program, rain and snow hit the midwest and the worst may be yet to come for businesses and farmers in the region. but fert, here's how the international closed today. turning now to market focus, a parade of earnings after the market closed today. we start with dow component
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at&t. profits per share were in line and revenues were slightly below analyst estimates. shares had been up less than 1% before the close and follows as much as 2% in after hours. >> amgen reported higher first-quarter profits when increased sales of the rheumatoid arthritis drug. share his been flat before the close and dropped as much as 5% in the after-hours trade as you see on that chart. >> but shares of yum brands surged in after hours trading by more than 5%. the company expected double digit profit growth in 2014. investors focused on the upbeat forecast instead of disappointing revenues because of troubleses in china, tainted poultry and now avian flew. it will open 700 locations in china this year. shares were down 2% ahead of the report at $64 a share. and a bounceback for coach. it reported a 6% gain in profits and increased a dividend.
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a footwear line after a poor holiday quarter. shares were up on the result and an increase gaining almost 10% today. metlife boosted its dividend by almost half to 25 1/2 cents a share and that's the first raise in six years and as a result shares jumped almost 5.5%. days of powerful rainstorms have caused flooding to rivers big and small throughout the midwest, and now all that surging water is threatening the northern plains states just as farmers prepare for the spring planning season. how will the region deal with the cost and devastation of flooding and what could it mean to the nation's corn and wheat belt? sharon epperson has more. >> reporter: the danger may be easing from surging rivers, but after days of drenching rain the damage has been done. >> this is the record-setter flood from peoria in modern times and we're at that time 30 feet. >> steve yayinger who runs the
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hard-hit heart of illinois regional port district based in peoria hopes shipping traffic will get back to normal conditions if the dryer weather forecast holds back over the next few days. >> we're expecting an easing of the situation. water's going down and the resumption of traffic for transportation purposes for agriculture and soybeans and fertilizers and the like and probably by about wednesday going into thursday. runaway barges and busted bridges have made it difficult to navigate these waters for the past week. home, businesses and farms along the busiest commercial shipping lane have been flooded and now the focus shifts to the northern plains where it still looks like winter. snow packs in some parts of north dakota are running 20 to 40 inches deep, but if there's more wet weather it warms up and the snow begins to melt there could be trouble. the sandbags have been out for about a week.
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part of the red river flooded there two weeks ago causing $100 million worth of damage and there are fears it could be worse this time. when the snow melts the runoff could take farmland top voile with it, a problem that has grown worse since the grasslands were converted to farms. so far this year corn prices have fallen 11%, and wheat is down more than 12%, but that may change. one of the north dakota farmers we spoke with called hopes of planting half a million new acres of corn this year a pipe dream. for "nightly business report" i'm sharon epperson. >> it looks so far away for us here in new york, but all of that impacts us. higher corn prices meet higher dary and meat prices and we'll see it in restaurants and the grocery stores. >> we have flooding now and we had drought last summer. the farming business is a tough dog gone business to be in. >> we live in an era of extremes.
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>> wishing them luck. still ahead, folks, why hollywood is falling in love with aging baby boomers. but first a look at how commodities, treasurys and currencies fared today. ♪ ♪ ♪ >> have you seen any good movies lately if if you're a baby boomer you might be heading to the cineplex more often. the motion picture of america
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shows more older americans are going to the movies more often than any other age group. as we told you yesterday, with younger people streaming more content through netflix or watching films on their tablets and smartphones, hollywood is now aiming right where the big money is, making movies geared toward the people who still like to watch them on the silver screen. julia boorstin has the story. >> while summer action flicks may target teenage fan boy, what is old is new again in hollywood. studios are increasingly targeting the 50 and older crowd with the r-rated romantic comedy "the big wedding" with four a-list baby boomer stars, robert deniro, susan sarandon, diane keaton and robin williams. >> i feel so used. >> this weekend's "big wedding" is debuting against mark wahlberg and the rock in "pain and gain" which targets a younger demographic.
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earlier, featuring 70-year-old harrison ford brought in nearly $30 million. in contrast, teen scream flick "squa "scary movie 5,". >> they believe that's how you see a movie, in a theater. >> in contrast, teenagers and 20-somethings more open to streaming a move owe netflix or watching video on demand which is why movie studios are increasingly focused on the older demographic. based on last year's results, it's working. >> a slew of movies with adult appeal like "silver linings playbook" and "lincoln" made big money at the box office and drew critically acclaimed. >> adults don't want to feel like they're teenagers again. they want intelligent, engaging films in hollywood when hollywood realizes that, that's when they make the real money. >> and with the great gatsby from warner brothers opening
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next month, hollywood could hit a gold mine. i'm julia boorstin in los angeles. >> the big drop in gold prices last week sent a lot of savvy investors into the yellow metal as prices hit two-year lows. now the u.s. mint has been forced to suspend sales of its .1 ounce american eagle gold bouillon coins. gold coin sales are up 100% over the same period last year and there are still plenty of one-ounce, half-ounce and quarter-ounce coins to meet demand. in other words, go bigger or go home, i suppose. >> or go to the movies and you don't need to spend that kind of money. >> i saw a movie called "parental guidance" it really was a baby boomer age story of the three generations trying to raise a family. very interesting. >> a lot of good movies coming out this summer. that will do it for tonight's edition of "nightly business report" program thanks so much for watching. >> have a great evening,
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everyone. tileir a tyler and i will be back right here tomorrow. "nightly business report" has been brought to you by --
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